The choice between the 70% rule and the 75% rule is not a matter of preference it is a matter of context. Use the wrong formula for your specific situation and you either overpay for a deal (applying 75% when 70% was correct) or walk away from a deal that would have profited (applying 70% when 75% was justified). On a $350,000 ARV property, the difference between a 70% and 75% ceiling is $17,500 in maximum allowable offer. That $17,500 is the margin between winning the deal and losing it to a competing investor who understood which formula the situation called for.
The Freddie Mac Primary Mortgage Market Survey benchmark stood at 6.46% as of April 2, 2026. Hard money lending rates in Florida are running 10% to 13% annually, with 2 to 4 origination points. In this financing environment, the 5-percentage-point spread between the two rules does not simply change your offer price it changes whether the deal produces an adequate return at all, or produces a loss. The formula choice has to be grounded in the specific cost structure of each deal, not in a general preference for one rule over another.
This article gives you the decision framework for choosing between the 70% rule and the 75% rule: what each one is actually designed to do, which market conditions and deal types justify each, and the specific calculation that tells you whether the premium in the 75% rule is financially justified by your cost structure. By the time you finish reading, you will know exactly which rule to apply to your next Florida deal and why.
This article contains affiliate links. ACT Global Media may receive compensation if you apply through links on this page. This does not affect our editorial content or the neutrality of our analysis.
What You Will Learn From This Article
- The 70% rule and 75% rule calculate the same thing which is maximum allowable offer but are designed for different deal types, risk profiles, and investor situations. Using the wrong one for your deal type is not a conservative or aggressive choice. It is an inaccurate one.
- The 75% rule produces a maximum offer that is $17,500 higher than the 70% rule on a $350,000 ARV property. Whether that additional $17,500 is justified depends on one specific factor: whether your total cost stack (financing + holding + selling + acquisition) is low enough to absorb the narrower margin.
- The 75% rule was originally designed for cash buyers with minimal rehab and near-immediate exit specifically, wholesale-to-retail or light-cosmetic flip scenarios where total non-acquisition costs run 15% to 18% of ARV. In Florida’s 2026 financing environment, hard money borrowers cannot apply 75% on most deals without eroding into unacceptable margins.
- Florida investors using hard money at current rates (10% to 13%) on deals with 90 to 180-day hold periods should typically apply 65% to 68% of ARV, not 70% and certainly not 75% because the financing cost alone consumes 7% to 11% of ARV for a 6-month hard money project.
- The one scenario where 75% is genuinely appropriate for a Florida investor in 2026: cash purchase on a cosmetic-only property with confirmed ARV, minimal rehab under $20,000, and a buyer pipeline that enables a 60-day or shorter hold.
- Wholesalers who are not actually flipping the property but assigning their contract to another investor appropriately use 75% as the threshold for the end-buyer investor’s MAO, then back out their assignment fee to determine their own maximum acquisition price. This is the origin of the 75% rule and the context in which it makes sense.
- The most expensive mistake in this decision: applying 75% on a financed Florida deal without running the full cost stack, then discovering at the end of the project that the numbers worked on paper but not in reality. On a $350,000 ARV deal, this error can cost $15,000 to $25,000 in unexpected margin erosion.
Understanding What Each Rule Is Actually Designed to Do
Before comparing the formulas, you need to understand the problem each one solves because they were built for different problems.
The 70% rule is a quick-filter tool for a leveraged investor: someone who is financing the acquisition with hard money, private capital, or a bridge loan; who has meaningful rehab to complete; and who needs the 30% buffer to cover financing costs, holding costs, acquisition fees, selling costs, and a profit margin. The 30% buffer embedded in the rule is a compression of a full cost stack analysis. When the rule’s embedded assumptions match your actual costs, the formula produces an accurate MAO.
The 75% rule originated in a different context: it describes the threshold at which a property is attractive to an experienced cash buyer, wholesale investor, or investor with minimal rehab and very low-cost financing someone whose total non-acquisition costs (financing, holding, selling, and carrying) run approximately 15% to 18% of ARV rather than 25% to 30%. At 75% of ARV minus repairs, the remaining 25% buffer needs to cover everything else. If you are paying 2 points and 11% hard money on a 5-month hold, your financing alone can consume 7% to 8% of ARV. That leaves only 17% to 18% for everything else a margin that will not survive the transaction costs of buying and selling in Florida, let alone produce a return that justifies the risk.
The confusion between the two rules persists because the real estate investing education space frequently presents them as competing options where one is “more conservative” (70%) and one is “more aggressive” (75%). That framing is wrong. Neither rule is more or less aggressive than the other in isolation. Each is accurate for specific conditions and inaccurate when those conditions are not met.
The specific question that determines which rule is appropriate is not “how much risk am I comfortable with?” It is: “what will my total non-acquisition costs actually be on this deal, and is there enough margin at either threshold to produce an acceptable return?”
The Full Cost Stack: Why the Formula Choice Is a Math Problem, Not a Style Choice
The only way to determine whether 70% or 75% is appropriate for a specific deal is to build the full cost stack all costs from acquisition to sale and compare the total to the ARV-based ceiling.
Here is the full cost stack for a typical Florida financed fix-and-flip in 2026:
Acquisition costs: Title search and insurance, deed recording, property inspection, lender origination fees: approximately 1% to 3% of purchase price.
Financing costs: Hard money at 10% to 13% annualized, plus 2 to 4 origination points, for the duration of the hold. For a $200,000 loan at 11% with 3 points on a 5-month hold: $6,000 (points) + $9,167 (interest) = $15,167. As a percentage of a $350,000 ARV: 4.3%.
Holding costs: Vacant property insurance ($1,250 to $2,250 per 6 months in Florida), utilities ($100 to $300 per month), property taxes (prorated), HOA if applicable. Estimate $3,500 to $5,500 for a 5-month hold on a typical Florida property.
Selling costs: Real estate agent commissions (typically 5% to 6%) plus buyer closing costs if offered (1% to 2%) plus title and recording at exit: total 6% to 9% of sale price. On a $350,000 ARV, this is $21,000 to $31,500.
Repair costs: Line-item scope, Florida-adjusted (see 70% rule article for the Florida contractor cost premium).
Minimum profit target: $25,000 to $40,000 on a $300,000 to $450,000 ARV project.
Now run the math for both rules on a $350,000 ARV with $45,000 in rehab and $200,000 in hard money financing at 11%, 3 points, 5-month hold:
70% rule MAO: ($350,000 × 0.70) – $45,000 = $245,000 – $45,000 = $200,000
At $200,000 purchase, $45,000 rehab, $15,167 financing, $5,000 holding, $24,500 selling (7%): total costs = $289,667. Projected profit: $350,000 – $289,667 = $60,333. That works.
75% rule MAO: ($350,000 × 0.75) – $45,000 = $262,500 – $45,000 = $217,500
At $217,500 purchase (same everything else): total costs = $307,167. Projected profit: $350,000 – $307,167 = $42,833. That also works barely, and only because this is a moderate rehab with manageable hold time.
Now stress-test the 75% scenario: the project runs 7 months instead of 5 (permits delayed; common in Florida coastal counties). Additional financing cost at 11% on $200,000 for 2 extra months: $3,667. New projected profit: $42,833 – $3,667 = $39,166. Still profitable, but with almost no buffer for the unexpected items that show up in every Florida flip.
Now add a common Florida complication: the vacant property insurance renewal came in $800 higher than estimated, and there were two contractor call-backs totaling $2,200 in cost overruns. New projected profit: $39,166 – $800 – $2,200 = $36,166. Still above minimum threshold, but the margin compression is visible. Every real world variance against the pro forma lands on profit. At 75%, there is much less to give away.
70% vs 75% Rule: Full Cost Stack Comparison on a $350,000 ARV Deal
| Cost Item | 70% MAO: $200,000 | 75% MAO: $217,500 | Notes |
| Purchase price | $200,000 | $217,500 | Difference: $17,500 |
| Rehab cost | $45,000 | $45,000 | Same scope |
| Acquisition closing | $4,500 | $4,500 | ~1.5% of purchase |
| Financing (11%, 3pts, 5 mo.) | $15,167 | $15,167 | Same terms |
| Holding (5 months) | $5,000 | $5,000 | Insurance, taxes, utilities |
| Selling costs (7% of ARV) | $24,500 | $24,500 | Commission + closing |
| Total all costs | $294,167 | $311,667 | |
| Projected profit | $55,833 | $38,333 | $17,500 difference |
| Profit as % of ARV | 15.9% | 10.9% | |
| Buffer for overruns | High | Thin |
Sources: Hard money rate data from Florida private lending market; selling cost estimate from Florida Realtors agent commission data and title company fee schedules; holding cost estimates based on Florida vacant property insurance and utility market data 2025-2026. All figures illustrative; actual costs vary.
The table makes the decision visible: the 75% rule is not “wrong” in absolute terms on this deal. But it produces a 10.9% profit margin with thin buffer. Any combination of timeline extension, contractor overrun, or unexpected repair that totals more than $13,833 converts this deal from a profit to a loss. The 70% rule at 15.9% margin provides meaningful runway for exactly those scenarios. For a financed investor in Florida’s 2026 market, the question is whether the deal’s specific conditions justify accepting the thinner margin to make the acquisition possible.
When the 75% Rule Actually Makes Sense in Florida 2026
With the cost stack analysis above establishing why the 75% rule is risky for financed rehab investors, there are specific scenarios where 75% is genuinely the right tool.
Scenario 1: Cash Purchase with Cosmetic-Only Rehab
A cash buyer who purchases a cosmetic-only property paint, flooring, staging, no structural or mechanical work and exits within 60 to 90 days has a radically different cost structure than the financed rehab investor. No financing cost. Minimal holding cost. Quick exit minimizes market exposure. In this scenario, the total non-acquisition costs may genuinely run 15% to 18% of ARV, making the 75% threshold appropriate and the 30% buffer unnecessary. Cash buyers with deal pipelines and expedited exit strategies are the natural users of the 75% rule.
In Florida specifically, the coastal markets with strong year round buyer demand certain zip codes in Palm Beach County, the western communities of Fort Lauderdale, stabilized neighborhoods in Brevard County’s Space Coast support quick cosmetic flip exits because the buyer pool is consistent and deep. A well-priced, well-staged cosmetic flip in these markets routinely goes under contract in 10 to 21 days after listing. For cash buyers operating in those specific micro-markets with well-developed buyer agent relationships, 75% can work.
Scenario 2: Wholesaling (Assigning the Contract)
This is the original context for the 75% rule and still its most appropriate application. A wholesaler does not renovate and resell a property. A wholesaler identifies an off-market or distressed property, gets it under contract, and assigns that contract to an end-buyer investor for an assignment fee. The end-buyer investor typically pays cash or uses hard money and does their own renovation.
In this scenario, the wholesaler structures the equation differently:
End-buyer’s maximum offer at 70% = (ARV × 0.70) – Repairs = End-buyer MAO
The wholesaler then backs out their assignment fee from the end-buyer’s MAO:
Wholesaler’s maximum acquisition price = End-buyer MAO – Assignment fee
If a wholesaler is marketing a deal by saying “this meets the 75% rule,” they mean the deal pencils for their end-buyer at the 75% threshold, which is typically a cash buyer’s evaluation criteria. The wholesaler’s own acquisition price was lower than 75%, leaving room for their assignment fee. When you see “75% rule” used in wholesaling education, this is the context.
Scenario 3: The Negligible-Financing-Cost Private Money Scenario
Some experienced Florida investors have access to private capital at 6% to 8% with no origination points, from relationships built over years of transactions. At 7%, no points, for a 4-month hold on a $200,000 loan: financing cost is $4,667. Compare that to hard money at 11% + 3 points = $15,167 for the same loan and timeline. The difference is $10,500. That $10,500 is the difference between 70% and 75% being viable. If your financing is cheap enough, 75% pencils; if your financing is at current hard money market rates, 75% does not pencil on most financed deals.
The Florida implication: building relationships that provide access to lower-cost private capital is not just a nice-to-have for experienced investors. It is the mechanism that unlocks the ability to make competitive offers at the 75% threshold while still maintaining adequate margin. Investors who have not yet built those relationships should default to the 70% rule and let the relationship development process be a parallel business-building effort.
A Real-World Scenario: DeShawn in Gainesville
DeShawn is a 35-year-old civil engineer in Gainesville, Alachua County. He closed his first flip two years ago and is evaluating his fourth deal: a 3-bedroom, 2-bath townhouse in a desirable Gainesville neighborhood, listed off-market at $198,000. The property needs light to moderate rehab: updated kitchen, two full bathroom renovations, new flooring, and fresh paint. There are no structural issues, no roof concerns (2017 metal roof in good condition), and no HVAC replacement needed.
His ARV analysis: comparable renovated 3/2 townhomes in the same complex and adjacent streets sold between $268,000 and $285,000 in the last 5 months. He uses $268,000 as his conservative ARV.
His repair estimate (Alachua County):
- Kitchen update (not full gut): $14,500
- Two bathroom renovations: $11,200
- LVP flooring throughout: $7,800
- Interior paint: $3,400
- Miscellaneous punch list and dumpster: $2,100
- Permits: $1,200
- Total rehab: $40,200
He is working with a private lender at 8.5%, 1 origination point, for a maximum 5-month hold. His loan amount would be $160,000 (approximately 81% of purchase price).
Running the 75% rule: ($268,000 × 0.75) – $40,200 = $201,000 – $40,200 = $160,800 MAO. The seller wants $198,000. He’s still $37,200 below asking.
Running his full cost stack at $160,800 purchase:
- Purchase: $160,800
- Rehab: $40,200
- Acquisition closing: $3,200
- Financing (8.5%, 1pt, 5 months): $1,600 + $5,667 = $7,267
- Holding (5 months: insurance $900, utilities $650, taxes $800): $2,350
- Selling (7% of $268,000): $18,760
- Total: $232,577
- Projected profit: $268,000 – $232,577 = $35,423
That 13.2% return on ARV is solid, and it is achievable because DeShawn’s private money cuts his financing cost by more than half compared to hard money. The 75% rule is valid for his deal because his cost structure low-cost private financing, light rehab, favorable hold timeline actually produces a workable margin at that threshold.
The seller’s $198,000 does not work at any rule-based formula. DeShawn makes an offer at $155,000. The seller declines. He walks away from the deal correctly, having done the math before making an emotional commitment to a property that was priced wrong for its rehab and ARV profile.
From My Experience: Florida Market Insight
In the Miami-Dade and Volusia County markets, the 75% rule confusion causes more deal evaluation errors than any other single formula misapplication I observe. The pattern is consistent: an investor sees a property that appears attractive, runs a quick 75% calculation, concludes it pencils, and submits an offer without modeling the actual cost stack. The property closes, the project completes, and the profit is either significantly below projection or, in cases where the project ran long or encountered material surprises, negative.
The Miami-Dade market is particularly susceptible to 75% rule misapplication because the entry prices are high relative to most other Florida markets, which means the absolute dollar difference between 70% and 75% on a $450,000 ARV property is $22,500. Investors who are already stretching their capital to compete in Miami-Dade’s acquisition environment sometimes reach for the 75% threshold as justification for offers they cannot actually support at the full cost stack level. When a $4,500 per year vacant property insurance quote arrives on a 1960s Coral Gables property not unusual in that market for older construction it is rarely included in the pro forma that led to the acquisition decision.
The Volusia County market offers the opposite instructive scenario: properties that look like they require 70% to protect margin but can actually support 75% for investors who know the market well enough to have reliable contractor relationships, confirmed buyer pipelines, and access to low-cost private financing. The Daytona Beach and Port Orange submarkets have significant inventory of pre-1990 single-family homes that attract cash buyers and experienced flippers who can move quickly and inexpensively through light rehab scopes. In those specific conditions, I observe experienced local investors winning deals at 74% to 75% of ARV that out-of-market investors running 70% calculations walked away from and profiting.
What mainstream fix-and-flip content consistently gets wrong about the 70% vs 75% debate is treating it as a risk-tolerance question rather than a cost-structure question. Articles that frame the choice as “use 70% if you’re conservative, 75% if you’re aggressive” are misleading their readers into making decisions based on psychology rather than math. The correct framing is: build your cost stack first, then determine which rule produces a MAO that returns your required profit after all those costs are paid. The rule you apply should be the conclusion of the analysis, not the starting assumption. In Florida’s 2026 financing environment, with hard money at 10% to 13% and vacant property insurance running $1,250 to $2,250 per 6 months, most financed Florida investors will find the math consistently supports 65% to 70%, not 75%.
Common Mistakes Florida Investors Make Choosing Between the 70% and 75% Rule
Mistake 1: Choosing a Rule Before Building the Cost Stack The fundamental error in the 70% vs 75% debate is treating it as a decision made before analysis rather than a conclusion drawn from analysis. The rule should be the output of your cost stack model, not the input. An investor who decides upfront “I use the 75% rule” and then evaluates deals through that lens will systematically overpay on deals where their actual cost structure does not support it. Run the full cost stack first: purchase price (tentative), rehab, financing, holding, selling. Calculate the profit. If it meets your threshold, the deal works. The rule you happened to apply is irrelevant to whether it works; what matters is whether the projected profit after all costs justifies the risk.
Mistake 2: Applying the Same Rule to Wholesale Assignments and Flip Exits Wholesalers and end-buyer flippers are solving different problems with the same formula vocabulary. A wholesaler evaluating whether to put a property under contract is asking “does this deal work for the type of investor who buys from me?” The answer to that question is calibrated to the end-buyer’s threshold, which is often 70% or lower for financed rehab investors. When a wholesaler uses 75% as their personal acquisition filter rather than as the end-buyer’s floor they consistently build assignment fees into deals that are marginal for the end buyer, damaging their reputation with their buyer network. The rule serves different functions in different roles.
Mistake 3: Ignoring the Hold Period in the Formula Selection The difference between a 60-day cosmetic flip and a 150-day structural rehab is not just a construction timeline difference. It is the difference between financing consuming 3% to 4% of ARV and financing consuming 8% to 11% of ARV at current hard money rates. An investor who applies 75% to a heavy rehab project because they ran their last light cosmetic flip profitably at 75% is making a category error. The formula that worked for a 60-day, $20,000-rehab project does not translate to a 150-day, $75,000-rehab project without a complete re-examination of the cost stack. Florida investors who fail to recognize this distinction often have one profitable light-flip experience that seeds a false confidence in the 75% rule.
Mistake 4: Not Accounting for Florida’s Seasonal Market When Selecting an Exit Strategy Florida’s resale market has meaningful seasonality that interacts with the 70% vs 75% decision in a non-obvious way. If your projected exit listing and selling a renovated property lands in the June through August period in a coastal or vacation-adjacent market, your days-on-market will be longer than in the October through April primary season. Longer days-on-market means more holding cost. More holding cost means the cost stack expands. A deal that penciled at 75% for a February exit may not pencil at 75% if the project completes in July. Building seasonal exit risk into the formula selection requires knowing your market’s absorption pattern well enough to model a realistic hold period rather than an optimistic one.
Mistake 5: Treating ARV as a Single Number Rather Than a Range Both the 70% and 75% rules produce a MAO that is only as accurate as the ARV estimate it is based on. ARV is a range in practice, not a single number: comparable sales analysis typically produces a spread of $20,000 to $50,000 between the low and high comparables, and the property’s specific features and condition relative to those comparables determine where within that range it will exit. Using the high end of the ARV range with the 75% rule is a compounding error: the aggressive formula stacked on the optimistic ARV produces a MAO that assumes everything goes right. Using the conservative end of the ARV range with the 70% rule is the opposite: it builds caution into both inputs. The general rule of thumb that holds up across market cycles is to apply the more aggressive threshold (75%) only when you have a tight ARV range backed by multiple strong comparables, and to apply the more conservative threshold (70% or lower) when your comparable sales data shows a wide range or when the most recent comps are more than 90 days old.
Mistake 6: Applying National Templates to Florida Rehab Costs The 75% rule’s viability depends heavily on the rehab cost component. In Florida, as documented in ACT Global Media’s prior coverage of fix-and-flip investing, contractor pricing runs 12% to 20% above the national average, and permit timelines in coastal counties routinely extend project holds by 4 to 8 weeks. An investor who uses a national per-square-foot rehab template from a real estate investing course without Florida-adjusting it will consistently underestimate their repair budget. Underestimating rehab by $10,000 on a $350,000 ARV deal shifts the apparent viability from 75% to 70% in terms of actual margin, without the investor recognizing that the formula threshold they applied was built on an inaccurate repair input.
Final Analysis
The 70% vs 75% rule comparison reveals something broader about how real estate investment formulas work in practice: they are shorthand for a cost stack analysis, and the shorthand breaks down whenever the assumptions embedded in the formula diverge from the actual conditions of the deal.
The underreported aspect of this debate in mainstream fix-and-flip content is the origin of the 75% rule as a wholesale tool, and how its migration into flip investing education has created a generation of investors using it in contexts where it was never designed to apply. The 75% rule describes the acquisition threshold for a cash buyer with minimal rehab and a buyer pipeline for rapid exit. When a hard money borrower with a 5-month rehab timeline applies 75%, they are using a formula that was calibrated for a 60-day cash deal on an entirely different cost structure. The result, often enough, is a deal that works on the initial spreadsheet and underperforms at the final accounting.
Two observations not covered elsewhere in this article: the National Association of Realtors’ 2024 data showed that Florida’s median days on market for investment-grade properties increased relative to 2022 peaks, which means the hold period assumption embedded in any formula applied today is longer than it was two years ago. And Construction Coverage’s 2024-2025 data on renovation cost trends shows Florida among the top 10 most expensive states nationally for contractor labor and materials a structural reality that pushes the effective threshold for financed Florida flips toward 65% to 68%, not 70% to 75%.
For Florida investors in 2026, the practical synthesis of the 70% vs 75% question is this: build your cost stack first, including actual financing terms (not assumed percentages), actual Florida holding costs (not national templates), and a realistic hold period (not the optimistic one). Apply the ARV threshold that produces your minimum acceptable profit. If that threshold is 75%, the 75% rule is right for your deal. If it is 68%, apply 68%. The formula should fit the deal, not the other way around. The investor who understands this distinction will consistently make better acquisition decisions than the one who is loyal to either formula as a fixed principle.
Frequently Asked Questions
What is the difference between the 70% and 75% rule in real estate? Both rules calculate your maximum allowable offer (MAO) using the same formula: (ARV × the percentage) estimated repairs. The difference is the percentage applied: 70% leaves a 30% buffer for costs and profit, while 75% leaves a 25% buffer. On a $350,000 ARV property with $45,000 in repairs, the 70% rule produces a MAO of $200,000 while the 75% rule produces $217,500, a $17,500 difference. The 75% rule is appropriate for low-cost structures (cash buyers, minimal rehab, quick exits); the 70% rule is appropriate for financed deals with significant rehab. At current Florida hard money rates of 10% to 13%, most financed investors should use 70% or lower.
Is the 75% rule better than the 70% rule for Florida flips? Neither rule is universally better. The right choice depends on your financing cost, rehab scope, hold period, and selling costs. The 75% rule makes sense only if your total non-acquisition costs (financing, holding, and selling) will genuinely run 15% to 18% of ARV. For a cash buyer with cosmetic rehab and a 60-day exit, that is achievable. For a hard money borrower with a 120 to 150-day financed rehab in Florida’s 2026 market, it is not: financing alone at 11% + 3 points on a 5-month hold can consume 7% to 8% of ARV, leaving only 17% to 18% for everything else. Run the full cost stack before choosing.
Why do wholesalers use the 75% rule instead of 70%? Wholesalers use 75% as the threshold for the end-buyer investor’s evaluation, not as their own acquisition ceiling. In wholesaling, the wholesaler identifies a deal at a price below the end-buyer’s MAO, assigns the contract to the end-buyer for a fee, and profits on the spread. A wholesaler might use 75% to evaluate whether a deal will attract their buyer network, then back out their assignment fee to determine their own maximum acquisition price. For example: if the end-buyer’s 75% MAO is $180,000 and the wholesaler wants a $10,000 assignment fee, their maximum acquisition price is $170,000. The 75% is calibrated for the end-buyer, not the wholesaler.
At what ARV does the choice between 70% and 75% matter most? The dollar difference scales directly with ARV. At $200,000 ARV, the difference is $10,000. At $300,000 ARV, it is $15,000. At $400,000 ARV, it is $20,000. At $500,000 ARV, it is $25,000. The higher the ARV, the more consequential the formula choice becomes in absolute dollar terms. In Florida’s coastal markets, where ARVs for renovated properties frequently run $400,000 to $600,000, the 70% vs 75% difference can determine whether you win or lose a deal by a significant margin. High-ARV markets reward investors who can justify the 75% threshold through low-cost financing or cash, because they can make competitive offers that 70%-rule investors cannot.
Should I use 70% or 75% if I’m buying in cash? Cash buyers have the most flexibility in formula selection because they eliminate the financing cost component, which is typically the largest single item in the 30% buffer. A cash buyer whose only non-acquisition costs are holding, selling, and a minimal repair scope may genuinely find that 75% or even 78% produces adequate margin. The specific threshold depends on the individual deal’s costs and your minimum profit target. A Florida cash buyer targeting a minimum $30,000 profit on a $350,000 ARV cosmetic flip would need total non-acquisition costs (holding + selling + repairs) to stay below $225,000 to justify a 75% offer of $217,500. If those costs are $35,000 in repairs + $24,500 selling + $3,000 holding = $62,500, the math shows $350,000 – $217,500 – $62,500 = $70,000 profit – well above the $30,000 minimum.
How do I calculate MAO using either rule? The formula is identical for both rules, with only the percentage changed: Maximum Allowable Offer = (ARV × percentage) – Estimated Repair Costs. For the 70% rule: MAO = (ARV × 0.70) – repairs. For the 75% rule: MAO = (ARV × 0.75) – repairs. Before applying either, establish ARV through comparable closed sales of renovated properties within a half-mile to one-mile radius, filtered for similar size and bedroom configuration. Then build a detailed line-item repair estimate. Apply the percentage that produces an MAO where your full cost stack, built with actual financing terms and Florida-specific holding costs, returns your minimum profit target.
What rule do experienced Florida investors actually use in 2026? In practice, experienced Florida fix-and-flip investors do not rigidly apply any single rule. They build a full cost stack model for each deal using actual financing terms (not assumed percentages) and actual Florida-specific costs (not national templates). Most will tell you the effective threshold for financed deals with meaningful rehab in Florida’s current environment runs 65% to 68% of ARV, not 70%. The 70% rule is a convenient shorthand that provides a fast first filter. When the deal passes the 70% filter, they run the full stack model to verify the margin. For cash deals or private money deals with low financing costs, the effective threshold can reach 72% to 75%. The formula you use should reflect your actual cost structure, not a fixed principle.
Disclaimer:
This article is for educational and informational purposes only. It does not constitute mortgage advice, financial advice, legal advice, or an offer to lend. Examples and figures used are illustrative only and may not reflect current rates, program availability, or individual eligibility. Program requirements, lender overlays, and market conditions vary by lender, borrower profile, and property type. Always consult a licensed mortgage professional, financial advisor, or attorney before making any financial decision. ACT Global Media is not a mortgage lender, mortgage broker, or financial advisor.
Editorial Note: All mortgage-related content in this article has been reviewed for SAFE Act compliance, CFPB educational content standards, and Florida OFR advertising guidelines before publication.
